SCHEDULE 14A
                                 (Rule 14a-101)
                     INFORMATION REQUIRED IN PROXY STATEMENT
                            SCHEDULE 14A INFORMATION
                Proxy Statement Pursuant to Section 14(a) of the
                Securities Exchange Act of 1934 (Amendment No. )

 Filed by the Registrant  |X|
 Filed by a Party other than the Registrant  |_|
 Check the appropriate box:
   o     Preliminary Proxy Statement      o   Confidential, For Use of the 
   |X|   Definitive Proxy Statement           Commission Only (as permitted by 
   o     Definitive Additional Materials      Rule 14a-6(e)(2))
   o     Soliciting Material Pursuant to
         Rule 14a-11(c) or Rule 14a-12


        
                         INDIVIDUAL INVESTOR GROUP, INC.
                (Name of Registrant as Specified in Its Charter)

    (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box):
|X|  No fee required.

|_|  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

(1)  Title of each class of securities to which transaction applies:


(2)  Aggregate number of securities to which transaction applies:


(3)  Per unit price or other underlying value of transaction  computed  pursuant
     to Exchange Act Rule 0-11:*


(4)  Proposed maximum aggregate value of transaction:



(5)  Total fee paid:

|_|  Fee paid previously with preliminary materials:

|_|  Check box if any part of the fee is offset as provided by Exchange Act Rule
     0-11(a)(2)  and identify the filing for which the  offsetting  fee was paid
     previously.  Identify the previous filing by registration statement number,
     or the form or schedule and the date of its filing.

(1)  Amount previously paid:


(2)  Form, Schedule or Registration Statement No.:


(3)  Filing Party:


(4)  Date Filed:

- --------
*    Set forth the amount on which the filing  fee is  calculated  and state how
     it was determined.

                                        1


<PAGE>

                         INDIVIDUAL INVESTOR GROUP, INC.
                                  1633 Broadway
                                   38th Floor
                            New York, New York 10019
                              --------------------


                    NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
                            To be held June 18, 1997
                              --------------------


         NOTICE IS HEREBY  GIVEN that the  Annual  Meeting  of  Stockholders  of
INDIVIDUAL  INVESTOR  GROUP,  INC.  ("Company")  will be held at the  offices of
counsel to the Company,  Graubard Mollen & Miller, 600 Third Avenue, 32nd Floor,
New York,  New York, on Wednesday,  June 18, 1997, at 10:00 a.m. local time, for
the following purposes:

     1. To elect two  directors  of the  Company  for a term of three  years and
until their successors are elected and qualified;

     2. To consider and vote upon a proposal to amend the Company's  Certificate
of Incorporation to increase the number of authorized shares of Common Stock and
Preferred Stock;

     3. To  consider  and vote upon a  proposal  to  approve  and adopt the 1996
Management Incentive Plan; and

     4. To transact such other business as may properly come before the meeting,
or any or all postponement(s) or adjournment(s) thereof.

         Only stockholders of record at the close of business on April 23, 1997,
will  be   entitled  to  notice  of,  and  to  vote  at,  the  meeting  and  any
postponement(s) or adjournment(s) thereof.

         YOU ARE URGED TO READ THE  ATTACHED  PROXY  STATEMENT,  WHICH  CONTAINS
INFORMATION  RELEVANT  TO THE  ACTIONS TO BE TAKEN AT THE  MEETING.  IN ORDER TO
ASSURE THE PRESENCE OF A QUORUM, WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING
IN PERSON, PLEASE SIGN AND DATE THE ACCOMPANYING PROXY CARD AND MAIL IT PROMPTLY
IN THE ENCLOSED ADDRESSED,  POSTAGE PREPAID ENVELOPE.  YOU MAY REVOKE YOUR PROXY
IF YOU SO DESIRE AT ANY TIME BEFORE IT IS VOTED.

                                           By Order of the Board of Directors


                                                    Scot A. Rosenblum
                                                       Secretary

New York, New York
M
ay 7, 1997



<PAGE>



                         INDIVIDUAL INVESTOR GROUP, INC.

                                 PROXY STATEMENT


                         ANNUAL MEETING OF STOCKHOLDERS
                            TO BE HELD JUNE 18, 1997

         This Proxy  Statement  and the enclosed  form of proxy are furnished in
connection with  solicitation of proxies by the Board of Directors of Individual
Investor  Group,  Inc.   ("Company")  to  be  used  at  the  Annual  Meeting  of
Stockholders of the Company to be held on June 18, 1997, and any postponement(s)
or adjournment(s)  thereof ("Annual  Meeting").  The matters to be considered at
the Annual Meeting are set forth in the attached Notice of Annual Meeting.

         The proxy will be voted (or withheld  from voting) in  accordance  with
any specifications made. Where no specifications are indicated, the proxies will
vote "FOR" the nominees for director, as described below under Proposal 1, "FOR"
the proposal to amend the Company's Certificate of Incorporation to increase the
number of  authorized  shares of Common Stock and  Preferred  Stock as described
below  under  Proposal  2,  "FOR" the  proposal  to  approve  and adopt the 1996
Management  Incentive  Plan as  described  below  under  Proposal 3 and,  in the
discretion of the proxyholders, on any other business properly coming before the
meeting  and any  postponement(s)  or  adjournment(s)  thereof.  A proxy  may be
revoked by giving  notice to the  Secretary  of the  Company  in  person,  or by
written  notification  actually received by the Secretary,  at any time prior to
its being exercised.

         The  Company's  executive  offices are located at 1633  Broadway,  38th
Floor,  New York, New York 10019.  This Proxy Statement and the enclosed form of
proxy are first being sent to stockholders on or about May 7, 1997.


                                VOTING SECURITIES

         The Board of  Directors  has fixed the close of  business  on April 23,
1997,  as the record  date for the  determination  of  stockholders  entitled to
notice of, and to vote at, the Annual  Meeting.  Only  stockholders of record at
the  close of  business  on that  date will be  entitled  to vote at the  Annual
Meeting or any and all  postponement(s) or adjournment(s)  thereof.  As of April
23,  1997,  the Company had issued and  outstanding  6,161,869  shares of Common
Stock,  the  Company's  only  class  of  voting  securities  outstanding.   Each
stockholder of the Company will be entitled to one vote for each share of Common
Stock  registered in his name on the record date. The presence,  in person or by
proxy,  of a  majority  of  all  of  the  outstanding  shares  of  Common  Stock
constitutes a quorum at the Annual  Meeting.  Proxies  relating to "street name"
shares  that are  returned  to the  Company but marked by brokers as "not voted"
will be treated as shares present for purposes of determining  the presence of a
quorum on all matters but will not be treated as shares  entitled to vote on the
matter  as to  which  authority  to  vote is  withheld  by the  broker  ("broker
non-votes").

         The election of directors  requires a plurality vote of those shares of
Common  Stock  voted at the  Annual  Meeting  with  respect to the  election  of
directors. "Plurality" means that the individuals who receive the largest number
of votes cast "FOR" are elected as directors. Consequently, any shares of Common
Stock not voted "FOR" a particular  nominee  (whether as a result of a direction
to  withhold  authority  or a  broker  non-vote)  will  not be  counted  in such
nominee's favor.

         The approval of the amendment to the Certificate of Incorporation  must
be approved by the affirmative  vote of a majority of the shares of Common Stock
outstanding  and entitled to vote.  Abstentions as to this matter are considered
present and entitled to vote on the matter and, therefore,  have the same effect
as a vote against the  proposal.  Shares of Common  Stock deemed  present at the
Annual Meeting,  but not entitled to vote on the amendment to the Certificate of
Incorporation  (because of either  shareholder  withholding or broker  non-vote)
will have the effect of a negative  vote  because  this  proposal  requires  the
affirmative vote of a majority of the outstanding shares of Common Stock.

         All other  matters to be voted on,  including  the approval of the 1997
Management Incentive Plan, will be decided by the affirmative vote of a majority
of the shares of Common Stock present or  represented  at the Annual Meeting and
entitled to vote. On any such matter, an abstention will have the same effect as
a negative  vote, but because shares of Common Stock held by brokers will not be
considered  entitled  to  vote on  matters  as to  which  the  brokers  withhold
authority, a broker non-vote will have no effect on the vote.

         The  following  table sets forth  certain  information  as of April 23,
1997,  with respect to the Common Stock ownership of (i) those persons or groups
known to beneficially own more than 5% of the Company's voting securities,  (ii)
each director and director-nominee of the Company,  (iii) each executive officer
whose  compensation  exceeded  $100,000  in the 1996 fiscal  year,  and (iv) all
directors and executive officers of the Company as a group.



<PAGE>

<TABLE>
<CAPTION>




 
                                                        Amount and Nature of                  Percent of Class
Name of Beneficial Owner                                Beneficial Ownership(1)              of Voting Securities
- ------------------------                                --------------------                 --------------------
<S>                                                              <C>                                  <C>  
Saul P. Steinberg                                                 1,288,090(2)                          20.9%
Jonathan L. Steinberg                                             1,176,677(3)                          18.3%
Reliance Financial Services Corporation                             666,666(4)                          10.8%
Robert H. Schmidt                                                   332,334(5)                           5.2%
Scot A. Rosenblum                                                   272,079(6)                           4.2%
Bruce L. Sokoloff                                                    36,000(7)                         *
Peter M. Ziemba                                                      10,000(8)                         *
All directors and executive
  officers as a group (6 persons)                                 1,827,090(9)                          25.8%

<FN>


*        Less than 1%.

(1)      Beneficial  ownership is determined in accordance with Rule 13d-3 under
         the  Securities  Exchange Act of 1934. The  information  concerning the
         stockholders is based upon information furnished to the Company by such
         stockholders.  Except  as  otherwise  indicated,  all of the  shares of
         Common  Stock are  owned of record  and  beneficially  and the  persons
         identified have sole voting and investment power with respect thereto.

(2)      Includes  666,666  shares of Common  Stock owned by Reliance  Insurance
         Company,   an  indirect  wholly  owned  subsidiary  of  Reliance  Group
         Holdings,  Inc. ("Reliance Group"). See Note (4).  Approximately 45% of
         the common stock of Reliance Group is beneficially owned by Mr. Saul P.
         Steinberg,  members of his family and affiliated trusts. As a result of
         his  stockholdings  in Reliance  Group,  Mr. Saul P.  Steinberg  may be
         deemed to control  Reliance  Insurance  Company and to beneficially own
         the shares of Common  Stock owned by Reliance  Insurance  Company.  Mr.
         Saul  P.  Steinberg  is  the  father  of  Mr.  Jonathan  Steinberg  and
         brother-in-law of Mr. Bruce L. Sokoloff.

(3)      Includes  276,667  shares  of  Common  Stock  issuable  upon  currently
         exercisable  options and options  exercisable  within the next 60 days.
         Does not include  403,333 shares of Common Stock issuable upon exercise
         of  options  which are not  currently  exercisable  and which  will not
         become exercisable within the next 60 days.

(4)      Includes  666,666  shares of Common  Stock owned by Reliance  Insurance
         Company.  Reliance Financial Services  Corporation is the direct parent
         company of Reliance Insurance  Company.  Reliance Insurance Company has
         sole  voting  power and sole  investment  power of the shares of Common
         Stock listed. (See Note 2 above.)

(5)      Includes  318,334  shares of Common Stock issuable upon the exercise of
         currently  exercisable  options and options exercisable within the next
         60 days.  Does not include 241,666 shares of Common Stock issuable upon
         exercise of options which are not currently  exercisable and which will
         not become exercisable within the next 60 days.

(6)      Includes  271,079  shares of Common Stock issuable upon the exercise of
         currently  exercisable  options and options exercisable within the next
         60 days.  Does not include 124,584 shares of Common Stock issuable upon
         exercise of options which are not currently exercisable, and which will
         not become exercisable within the next 60 days.

(7)      Includes  20,000  shares of Common Stock  issuable upon the exercise of
         presently  exercisable  options and options exercisable within the next
         60 days.  Does not include  10,000 shares of Common Stock issuable upon
         exercise of options which are not currently  exercisable and which will
         not become exercisable within the next 60 days.

(8)      Includes  10,000  shares of Common Stock  issuable upon the exercise of
         presently exercisable options within the next 60 days. Does not include
         20,000  shares of Common Stock  issuable upon exercise of options which
         are not  currently  exercisable  and which will not become  exercisable
         within the next 60 days.

(9)      Includes  896,080  shares of Common Stock issuable upon the exercise of
         currently  exercisable  options and options exercisable within the next
         60 days.  Does not include 799,583 shares of Common Stock issuable upon
         exercise of options which are not currently  exercisable and which will
         not become exercisable within the next 60 days.

</FN>
</TABLE>



                        PROPOSAL 1: ELECTION OF DIRECTORS

     The Board of Directors is divided into three classes,  each of which serves
for a term of three  years,  with only one class of directors  being  elected in
each year. The term of the first class of directors,  consisting of Mr. Jonathan
L.  Steinberg and Mr. Scot A.  Rosenblum  will expire on the date of this year's
Annual Meeting, the term of office of the second class of directors,  consisting
of Mr. Bruce L. Sokoloff and Mr. Peter M. Ziemba, will expire in 1998, and the


                                        2


<PAGE>



term of office of the third  class of  directors,  consisting  of Mr.  Robert H.
Schmidt,  will expire in 1999. In each case,  each director serves from the date
of his election until the end of his term and until his successor is elected and
qualified.

         Two persons will be elected at the Annual Meeting to serve as directors
for a term of three years.  The Company has nominated Mr.  Jonathan L. Steinberg
and Mr. Scot A. Rosenblum as the candidates  for election.  Unless  authority is
withheld,  the proxies  solicited by management will be voted "FOR" the election
of these  nominees.  In case  either of the  nominees  becomes  unavailable  for
election  to the Board of  Directors,  an event  which is not  anticipated,  the
persons named as proxies,  or their substitutes,  shall have full discretion and
authority to vote or refrain from voting for any other  candidate in  accordance
with their judgment.

Information about Nominees

         Jonathan L. Steinberg founded the Company and has served as Chairman of
the Board of Directors of the Company  since October 1988.  Mr.  Steinberg  also
served as President  from October 1988 to July 1994 and Treasurer of the Company
from  October  1988  to  June  1996.   In   addition,   Mr.   Steinberg  is  the
Editor-in-Chief  of each of the  Company's  publications.  From  August  1986 to
August  1988,  Mr.  Steinberg  was  employed  as an analyst in the  Mergers  and
Acquisitions Department of Bear, Stearns & Co. Inc., an investment banking firm.
Mr.  Steinberg is a nephew by marriage of Bruce L.  Sokoloff,  a director of the
Company. Mr. Steinberg is 32 years of age.

         Scot A.  Rosenblum  has served as a  director,  Vice  President,  Chief
Financial  Officer and Secretary of the Company since October 1988 and Treasurer
of the  Company  since June  1996.  In  addition,  Mr.  Rosenblum  served as the
Publisher of each of the Company's  publications  until March 1996.  From August
1986 to August 1988,  Mr.  Rosenblum was employed as an analyst in the Corporate
Finance Department of Bear, Stearns & Co. Inc.
Mr. Rosenblum is 32 years of age.

Information About Other Directors

         Each of the  directors  named in the  following  table will continue in
office after the Annual Meeting and until his term expires in the year indicated
and his successor is elected and qualified:

<TABLE>
<CAPTION>

                                               Term              Served as
Name                           Age          Expires In         Director Since      Principal Occupation
<S>                            <C>             <C>                  <C>                    <C>   
Bruce L. Sokoloff               47             1998                 1989                Director
Peter M. Ziemba                 39             1998                 1996                Director
Robert H. Schmidt               60             1999                 1994                President and Chief Operating Officer

</TABLE>


         Bruce L. Sokoloff has served as a director since 1989. Mr. Sokoloff has
served as Senior Vice President -  Administration  of Reliance  Group  Holdings,
Inc.,  the  holding  company  for  several  insurance  and  financial   services
corporations,  for more than five years and has been employed at Reliance  Group
Holdings, Inc. since 1973.  Mr. Sokoloff is an uncle by marriage of Mr. Jonathan
L. Steinberg.

         Peter M. Ziemba has served as a director  since 1996.  Mr. Ziemba is an
attorney and has been a partner of the law of firm Graubard  Mollen & Miller for
more than five years. Graubard Mollen & Miller is outside general counsel to the
Company.

         Robert Schmidt has served as a director,  President and Chief Operating
Officer of the Company  since July 1994.  From  January  1991 to June 1994,  Mr.
Schmidt  was  President  and  Chief   Executive   Officer  of  Dreyfus   Service
Corporation,  a marketing  and mutual fund  distribution  subsidiary  of Dreyfus
Corporation. From 1966 to December 1990, Mr. Schmidt served in various executive
capacities with Levine,  Huntley,  Schmidt & Beaver, an advertising agency which
he  co-founded,  including  Chairman  and Chief  Executive  Officer from 1985 to
December 1990.




                                        3


<PAGE>



Executive Officers, Board of Directors' Meetings and Committees

         Mr.  Henry  G.  Clark  (age  52)  has  been  Controller  and  Principal
Accounting  Officer since November 1995.  Prior to that, he was Chief  Financial
Officer/Controller of Seventh Generation,  Inc. from July 1990 to March 1992 and
then again from May 1993 to  December  1994.  Mr.  Clark is a  Certified  Public
Accountant.

         During  1996,  the  Board of  Directors  met four  times  and  acted by
unanimous  consent on six  occasions.  The Company has standing  audit and stock
option committees of the Board of Directors.

         The audit  committee  was  established  in June  1996 and is  currently
comprised of Mr. Bruce L. Sokoloff and Mr. Peter M. Ziemba.  The function of the
audit  committee  is to  recommend  annually  to  the  Board  of  Directors  the
appointment  of the  independent  accountants  of the  Company;  review with the
independent  accountants  the scope of the annual  audit and review  their final
report relating thereto;  review with the independent accountants the accounting
practices and policies of the Company;  review with the internal and independent
accountants  the overall  accounting and financial  controls of the Company;  be
available  to  independent  accountants  during the year for  consultation;  and
review related party  transactions by the Company on an ongoing basis and review
potential  conflicts  of  interest  situations  where  appropriate.   The  audit
committee had one meeting in 1996.

         The stock option committee of the Board of Directors is responsible for
administering the Company's 1991 Stock Option Plan ("1991 Plan"), the 1993 Stock
Option Plan ("1993 Plan") and 1996 Performance  Equity Plan ("1996 Plan"),  each
of which is discussed below. The stock option  committee  currently  consists of
Mr.  Jonathan L.  Steinberg and Mr. Bruce L.  Sokoloff.  During 1996,  the stock
option  committee  did not  meet,  but acted by  unanimous  written  consent  on
numerous occasions.


Executive Compensation

         The  following  table  sets forth the  compensation  for the past three
fiscal years ended December 31, 1996, for the Company's Chief Executive  Officer
and each other executive  officer whose  compensation  exceeded $100,000 for the
fiscal year ended December 31, 1996.

<TABLE>
<CAPTION>

===================================================================================================================
                                            SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------------------------------------------
                                                                Annual Compensation       Long-Term Compensation
                                                           --------------------------------------------------------
                                                                                          Number of     All Other
Name and Principal Position                         Year          Salary      Bonus        Options     Compensation
- -------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>           <C>        <C>           <C>           <C>  
Jonathan L. Steinberg,                               1996        $160,000       --          100,000        --
Chief Executive Officer
                                                     1995        $110,000     $200,000       80,000        --
                                                     1994        $110,000       --          500,000        --
- -------------------------------------------------------------------------------------------------------------------
Robert H. Schmidt,                                   1996        $210,427       --           80,000        --
President and Chief Operating Officer(1)
                                                     1995        $150,000     $150,000       80,000        --
                                                     1994         $75,000       --          400,000        --
- -------------------------------------------------------------------------------------------------------------------
Scot A. Rosenblum,                                   1996        $150,000       --           60,000        --
Vice President, Chief Financial Officer,
Treasurer and Secretary
                                                     1995         $99,990     $100,000       50,000        --
- --------------------------------------------------
                                                     1994         $91,247       --          100,000        --
===================================================================================================================
<FN>

(1)      Mr. Schmidt commenced employment with the Company in July 1994.

</FN>
</TABLE>


         The Company  employs Mr.  Robert H. Schmidt  pursuant to an  employment
agreement  expiring July 27, 1997,  renewable for  successive  one-year  periods
automatically,  unless  terminated under the notice  provisions set forth in the
agreement.  Mr.  Schmidt's  current  annual  base  compensation  is a  total  of
$212,500.  The Company is obligated to pay for life  insurance  benefits for Mr.
Schmidt up to an annual  premium amount of $10,000.  The agreement  requires Mr.
Schmidt  to  devote  his  full  business  time to the  Company  and  contains  a
non-competition  provision  for a period of one year  following  termination  of
employment.




                                        4


<PAGE>

     Mr.  Jonathan L.  Steinberg  and Mr. Scot A.  Rosenblum do not have written
employment agreements;  for fiscal year 1997 they are compensated with an annual
base salary of $230,000 and $162,500, respectively.

         On November 4, 1996, the Board of Directors adopted a compensation plan
for key executives  and employees of the Company.  Under this plan, the Board of
Directors  determined Messrs.  Steinberg,  Schmidt and Rosenblum are eligible to
receive  a cash  bonus  equal to 20% of their  base  salary  if the  information
services  operations  of the Company  (i.e.,  publishing  and on-line  services)
achieves target  profitability of $500,000 in the fiscal year ended December 31,
1997.

Option Grants

         The following  table sets forth the stock  options  granted in the last
fiscal  year to the  Company's  executive  officers  identified  in the  Summary
Compensation table above.

<TABLE>
<CAPTION>

===========================================================================================================================
                                           OPTIONS GRANTED IN LAST FISCAL YEAR
- ---------------------------------------------------------------------------------------------------------------------------
                                                                     % of Total
                                            Number of             Options Granted       Exercise Price       Expiration
Name of Executive                        Options Granted          to All Employees         Per Share            Date
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>                     <C>                   <C>                <C>  
Jonathan L. Steinberg(1)                     100,000                   12.95%                $7.50            11/4/06
- ---------------------------------------------------------------------------------------------------------------------------
Robert H. Schmidt(2)                          80,000                   10.36%                $7.50            11/4/06
- ---------------------------------------------------------------------------------------------------------------------------
Scot A. Rosenblum(3)                          60,000                    7.77%                $7.50            11/4/06
===========================================================================================================================
<FN>

(1)      The options  become  exercisable as to 33,334 shares of Common Stock on
         November  4, 1997 and 33,333  shares of Common  Stock on  November 4 in
         each of 1998 and 1999.

(2)      The options  become  exercisable as to 26,667 shares of Common Stock on
         November  4, 1997 and 26,666  shares of Common  Stock on  November 4 in
         each of 1998 and 1999.

(3)      The options  become  exercisable as to 20,000 shares of Common Stock on
         November 4 in each of 1997, 1998 and 1999.
</FN>
</TABLE>


         The  following  table sets forth the fiscal  year end option  values of
outstanding  options at December 31, 1996 and the dollar  value of  unexercised,
in-the-money  options for the  Company's  executive  officers  identified in the
Summary Compensation table above.

<TABLE>
<CAPTION>

- ------------------------------------------------------------------------------------------------------------------------------
                                            AGGREGATED FISCAL YEAR END OPTION VALUES
- ------------------------------------------------------------------------------------------------------------------------------
                                     Number of Securities Underlying                    Dollar Value of Unexercised
                                 Unexercised Options at Fiscal Year End:            in-the-Money Options at Year End(1)
                          ----------------------------------------------------------------------------------------------------
Name                              Exercisable              Unexercisable             Exercisable           Unexercisable
- ------------------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                       <C>                       <C>                    <C> 
Jonathan L. Steinberg               151,667                   528,333                  $329,062               $494,064
- ------------------------------------------------------------------------------------------------------------------------------
Robert H. Schmidt                   268,334                   291,666                  $523,331               $346,667
- ------------------------------------------------------------------------------------------------------------------------------
Scot A. Rosenblum                   258,579                   137,084                $1,117,614               $106,249
- ------------------------------------------------------------------------------------------------------------------------------
<FN>

(1)  The value of a share of Common  Stock on  December  31, 1996 as reported by
     The Nasdaq Stock Market was $7.25.
</FN>
</TABLE>


Director Compensation

         Directors  receive  no cash  compensation  for  their  services  to the
Company as directors,  but are reimbursed  for all reasonable  costs incurred in
attending  meetings  of the  Board of  Directors.  Pursuant  to the  1996  Plan,
directors who are not employees of the Company receive automatic grants of stock
options  upon  their  election  or  appointment  as a  director  and  upon  each
re-election  as a  director.  Each stock  option is for 30,000  shares of Common
Stock and vests at


                                        5


<PAGE>



the rate of  10,000  shares of Common  Stock per year  after an equal  period of
service, and once vested,  remain exercisable until the tenth anniversary of the
date of grant.  Each  option is  exercisable  per share at the market  price per
share on the date of  grant.  Notwithstanding  the  foregoing,  if the  director
eligible for an award of a stock option is  re-elected as a director and has not
yet served as a director  of the  Company  for a term of three full  years,  the
award of the stock option will be modified as follows:  (A) the number of shares
of Common  Stock that may be acquired  under the stock option will be reduced to
(1) 20,000  shares of Common Stock if the director has served as a director more
than two years,  but less than three years, (2) 10,000 shares of Common Stock if
the  director  has  served as a director  more than one year,  but less than two
years,  and (3) if the director has served less than one year as a director,  no
stock option will be awarded;  and (B) the stock option will be  exercisable  by
the director as to 10,000 shares of Common Stock on each of the second and third
anniversaries  of his re-election or  re-appointment  as a director if the stock
option  represents  the right to acquire  20,000  shares of Common Stock and the
stock option will be  exercisable  by the director as to 10,000 shares of Common
Stock  on the  third  anniversary  of his  re-election  or  re-appointment  as a
director if the stock option  represents  the right to acquire  10,000 shares of
Common Stock.

         Mr. Peter M. Ziemba was granted an option during 1996 to acquire 30,000
shares of Common Stock at $10.50 per share, vesting at the rate of 10,000 shares
of Common  Stock on June 19,  1997,  1998 and 1999,  exercisable  until June 19,
2006.

C
ompliance with Section 16(a) of the Exchange Act

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires the Company's officers, directors and persons who beneficially own more
than ten percent of a registered class of the Company's equity securities ("ten-
percent  stockholders")  to file reports of  ownership  and changes in ownership
with the Securities and Exchange Commission. Officers, directors and ten-percent
stockholders also are required to furnish the Company with copies of all Section
16(a)  forms they file.  Based  solely on its review of the copies of such forms
furnished  to it,  and  written  representations  that  no  other  reports  were
required,  the  Company  believes  that during the  Company's  fiscal year ended
December 31, 1996,  all its  officers,  directors and  ten-percent  stockholders
complied with the Section 16(a) reporting requirements.

S
tock Option Plans

1991 Plan

         In September 1991, the Company  adopted the 1991 Plan covering  200,000
shares of the Company's Common Stock pursuant to which officers,  directors, and
key employees of the Company are eligible to receive  incentive or non-qualified
stock options.  The 1991 Plan, which expires in October 2001, is administered by
the Stock  Option  Committee  of the Board of  Directors  pursuant to the powers
delegated to it by the Board of  Directors.  To the extent  permitted  under the
express provisions of the 1991 Plan, the Stock Option Committee has authority to
determine the selection of participants,  allotment of shares,  price, and other
conditions of purchase of options and  administration  of the 1991 Plan in order
to attract and retain persons instrumental to the success of the Company.  There
are options  outstanding under the 1991 Plan for 182,000 shares of Common Stock,
and options for 9,000 shares of Common Stock have been exercised.

1993 Plan

         In February  1993, the Company  adopted the 1993 Plan covering  500,000
shares of the Company's Common Stock pursuant to which officers,  directors, key
employees and  consultants  of the Company are eligible to receive  incentive or
non-qualified stock options, stock appreciation rights, restricted stock awards,
deferred stock, stock reload options and other stock based awards. The 1993 Plan
will  terminate at such time no further awards may be granted and awards granted
are no longer  outstanding,  provided that incentive options may only be granted
until  February  16,  2003.  The 1993 Plan is  administered  by the Stock Option
Committee  pursuant to the powers delegated to it by the Board of Directors.  To
the extent  permitted  under the  provisions of the 1993 Plan,  the Stock Option
Committee has authority to determine the selection of participants, allotment of
shares,  price, and other conditions of purchase of awards and administration of
the 1993 Plan in order to attract and retain persons instrumental to the success
of the Company.  There are options  outstanding  under the 1993 Plan for 427,501
shares of Common Stock, and options for 40,560 shares have been exercised



                                        6


<PAGE>




1996 Plan

         In 1996, the Company adopted the 1996 Plan covering 1,000,000 shares of
the Company's Common Stock pursuant to which officers,  directors, key employees
and   consultants   of  the  Company  are  eligible  to  receive   incentive  or
non-qualified stock options, stock appreciation rights, restricted stock awards,
deferred stock, stock reload options and other stock based awards. The 1996 Plan
will  terminate at such time no further awards may be granted and awards granted
are no longer  outstanding,  provided that incentive options may only be granted
until  March  18,  2006.  The 1996  Plan is  administered  by the  Stock  Option
Committee  pursuant to the powers delegated to it by the Board of Directors.  To
the extent  permitted  under the  provisions of the 1996 Plan,  the Stock Option
Committee has authority to determine the selection of participants, allotment of
shares,  price, and other conditions of purchase of awards and administration of
the 1996 Plan in order to attract and retain persons instrumental to the success
of the Company.  There are options  outstanding  under the 1996 Plan for 285,100
shares of Common Stock.

Management Plan

         In November 1996,  the Company  adopted the 1996  Management  Incentive
Plan covering  500,000 shares of the Company's  Common Stock,  pursuant to which
executives of the Company or its  subsidiaries are eligible to receive grants of
various awards. See Proposal 3 for a discussion of the 1996 Management Incentive
Plan and Appendix B for a copy of this plan.


 
                     PROPOSAL 2: TO APPROVE THE AMENDMENT
                       TO THE CERTIFICATE OF INCORPORATION

General

         The Company is currently authorized by its Certificate of Incorporation
to issue  10,000,000  shares of Common Stock and  1,000,000  shares of Preferred
Stock. The original Certificate of Incorporation provided authorization to issue
2,000,000  shares of Preferred  Stock,  of which  1,000,000  shares of Preferred
Stock were designated as the Convertible  Voting  Preferred Stock on December 4,
1991, which were subsequently converted into Common Stock and retired. As of the
record date,  6,161,869 shares of Common Stock were outstanding and no shares of
Preferred Stock were designated and  outstanding,  and the Company was obligated
to reserve  3,926,603  shares of Common Stock for issuance  under the 1991 Plan,
1993 Plan,  1996 Plan and 1996  Management  Incentive  Plan and upon exercise of
other outstanding  options.  As further discussed herein, the Board of Directors
believes  that the  current  number of  authorized  shares  of  Common  Stock is
inadequate for the long term growth and development of the Company. Accordingly,
the Board of Directors  proposes to amend the  Certificate of  Incorporation  to
increase  the  authorized  number of shares  of  Common  Stock by an  additional
8,000,000  shares of Common  Stock to  18,000,000  shares of Common Stock and to
increase the  authorized  number of shares of Preferred  Stock by an  additional
1,000,000 shares of Preferred Stock to 2,000,000 shares of Preferred Stock.

         The Board of Directors has  unanimously  approved the proposal to amend
the Certificate of Incorporation. As of the record date, the Company's directors
and  executive  officers  owned  of  record  933,010  shares  of  Common  Stock,
representing approximately 15% of the shares of Common Stock entitled to vote at
the Annual Meeting.  Each of the directors and executive officers own options to
purchase  shares of Common  Stock as set forth below and are eligible to receive
grants of options and/or equity based awards under the various  employee  equity
award plans and their employment arrangements or otherwise acquire securities of
the Company.  See "Voting  Securities".  The  Company's  directors and executive
officers  have  advised the Company  that they will vote their  shares of Common
Stock in favor of the proposal.


                                 Number of Shares of Common Stock
Name                               Subject to Outstanding Options
- ----                            ----------------------------------
Jonathan L. Steinberg                         680,000
Robert H. Schmidt                             560,000
Scot A. Rosenblum                             395,663
Bruce Sokoloff                                 30,000
Peter M. Ziemba                                30,000
Other officers as a group (1 person)           30,000




                                        7


<PAGE>

Reason for the Proposal

         The Company  currently has issued and outstanding  6,161,869  shares of
Common Stock and is obligated  to reserve  3,926,603  shares of Common Stock for
issuance under the 1991 Plan, 1993 Plan, 1996 Plan and 1996 Management Incentive
Plan and upon  exercise  of other  outstanding  options.  Based on the number of
shares of Common Stock  outstanding  as of the record date,  the need to reserve
shares  of Common  Stock as set  forth  above  and the  current  Certificate  of
Incorporation limit of 10,000,000 shares of Common Stock, the Board of Directors
does not believe  there is an  adequate  number of  authorized  shares of Common
Stock under the Certificate of  Incorporation  for management to be able to meet
current  obligations  of the  Company  and to plan  for the  future  growth  and
development of the Company.

         The  Board of  Directors  believes  approval  of the  amendment  to the
Certificate  of  Incorporation  is in the best  interest  of the Company and its
stockholders. The authorization of additional shares of Common Stock will enable
the Company to meet its obligations  under the various  employee  benefit plans,
employment  arrangements and outstanding  options and issue options,  awards and
warrants in the future. In addition,  the proposed amendment will give the Board
of Directors flexibility to authorize the issuance of shares of Common Stock and
Preferred  Stock  in the  future  for  financing  the  Company's  business,  for
acquiring other businesses,  for forming  strategic  partnerships and alliances,
for stock  dividends  and stock  splits,  and for director and employee  benefit
plans.

         Approval of the  proposal  will permit the Board of  Directors to issue
additional  shares of Common Stock and Preferred Stock without further  approval
of the  stockholders of the Company;  and the Board of Directors does not intend
to seek  stockholder  approval prior to any issuance of the  authorized  capital
stock unless stockholder approval is required by applicable law, the Certificate
of Incorporation or stock market or exchange requirements.  Although the Company
may from time to time  review  various  transactions  that  could  result in the
issuance  of Common  Stock or  Preferred  Stock and  management  of the  Company
currently is exploring the possibility of raising additional equity financing by
issuing Common Stock or Preferred Stock, which may occur in the near future, the
Board of Directors is not considering any proposals to issue  additional  shares
of capital stock,  except as may be required in connection  with the exercise of
existing  outstanding  options and other stock based  awards which may be issued
under the Company's 1991 Plan, 1993 Plan, 1996 Plan or 1996 Management Incentive
Plan or under any other plan or arrangement the Board of Directors may hereafter
approve.

         The  additional  flexibility  described  above afforded to the Board of
Directors by their ability to issue shares of Common Stock and  Preferred  Stock
could be used to discourage an unsolicited  takeover proposal which the Board of
Directors believes is not in the best interest of the stockholders. For example,
shares of  Common  Stock or  Preferred  Stock  could be  privately  placed  with
purchasers who may support the Board of Directors in opposing a hostile takeover
bid.  Although the Board of Directors is required to make any  determination  to
issue  securities  based  on  its  judgment  as to  the  best  interests  of the
stockholders  of the Company,  the Board of Directors could act in a manner that
would  discourage an acquisition  attempt or other  transaction  that some, or a
majority,  of the  stockholders  nevertheless  might believe to be in their best
interests or in which  stockholders might receive a premium for their stock over
the then market price of their stock.  In addition,  the issuance of such shares
might  make it  more  difficult  or  discourage  attempts  to  remove  incumbent
management.  Moreover,  the issuance of such shares might have a dilutive effect
on earnings per share and on the voting rights of the existing stockholders.

Description of Securities

Common Stock

         The holders of Common Stock of the Company are entitled to one vote for
each share held of record on all matters to be voted on by the  stockholders  of
the  Company.  There is no  cumulative  voting with  respect to the  election of
directors,  with the result  that the  holders of more than 50% of the shares of
Common  Stock of the Company  voted in an election  of  directors  can elect the
directors  of the  Company.  The holders of Common Stock are entitled to receive
dividends  when,  as, and if  declared  by the Board of  Directors  out of funds
legally available  therefor.  The Company never has paid dividends on its shares
of Common Stock. In the event of  liquidation,  dissolution or winding up of the
Company, the holders of the shares of Common Stock are entitled to share ratably
in all assets remaining available for distribution



                                        8


<PAGE>



to them after payment of liabilities  and after provision has been made for each
class of stock,  if any,  having  preference  over the Common Stock.  Holders of
shares of Common  Stock have no  conversion,  preemptive  or other  subscription
rights, and there are no redemption provisions applicable to the Common Stock.

Preferred Stock

         The  Company  is  authorized  to  issue   Preferred   Stock  with  such
designations,  rights and  preferences as may be determined from time to time by
the Board of  Directors.  Accordingly,  the  Board of  Directors  is  empowered,
without   stockholder   approval,   to  issue  Preferred  Stock  with  dividend,
liquidation,  conversion, voting or other rights that could affect adversely the
voting  power of other  rights of the holders of the Common  Stock.  The Company
does not have any Preferred Stock outstanding.

         If the proposal to amend the Certificate of  Incorporation is approved,
the fourth article of the  Certificate of  Incorporation  will be amended as set
forth  in  Appendix  A  to  this  Proxy  Statement.  The  financial  statements,
management's  discussion  and  analysis of  financial  condition  and results of
operations  and  related  information  is  incorporated  by  reference  from the
Company's  Annual Report to Shareholders  for the fiscal year ended December 31,
1996.

 
    THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THE APPROVAL
       OF THE PROPOSAL TO AMEND THE COMPANY'S CERTIFICATE OF INCORPORATION



                             PROPOSAL 3: APPROVAL OF
                         1996 MANAGEMENT INCENTIVE PLAN

         On November 4, 1996,  the Board of  Directors  unanimously  adopted the
1996  Management  Incentive  Plan  ("Management  Plan"),  subject to stockholder
approval.  The  Management  Plan  provides for the grant of options to executive
officers of the Company and its subsidiaries to purchase up to 500,000 shares of
Common  Stock.  The  Management  Plan is  intended to assist the Company and its
subsidiaries  in attracting,  retaining and motivating  executives of particular
merit.

         Although  the Company  believes  that all  material  provisions  of the
Management Plan have been set forth in this Proxy  Statement,  this summary does
not discuss all the  elements of the  Management  Plan and is  qualified  in its
entirety by  reference  to the text of the  Management  Plan, a copy of which is
attached to this Proxy  Statement  as Appendix B and is  incorporated  herein by
reference.


                 THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A
 
                VOTE "FOR" THE APPROVAL OF THE MANAGEMENT PLAN

Summary of the Management Plan

Administration

         The Management  Plan will be  administered by the Board of Directors or
by a committee ("Committee") appointed by the Board of Directors,  whose members
will serve at the  pleasure of the Board of  Directors.  If no  Committee  is so
designated,  then the  Management  Plan  will be  administered  by the  Board of
Directors.  The  Board  of  Directors  or,  if  appointed,  Committee,  has full
authority,  subject to the provisions of the Management Plan, to award (i) Stock
Options,  (ii) Stock Appreciation  Rights, (iii) Restricted Stock, (iv) Deferred
Stock,   (v)  Stock  Reload  Options  and/or  (vi)  other   stock-based   awards
(collectively, "Awards").

         Subject  to the  provisions  of  the  Management  Plan,  the  Board  of
Directors  or the  Committee  determines,  among  other  things,  the  executive
officers  to whom from  time to time  Awards  may be  granted  ("Holders"),  the
specific type of Awards to be granted  (e.g.,  Stock Option,  Restricted  Stock,
etc.),  the  number  of  shares  subject  to  each  Award,   share  prices,  any
restrictions or limitations on such Awards and any vesting, exchange,  deferral,
surrender, cancellation,



                                        9


<PAGE>



acceleration,  termination,  exercise or forfeiture  provisions  related to such
Awards.  The  interpretation  and  construction by the Board of Directors or the
Committee of any provisions of, and the  determination of any questions  arising
under, the Management Plan or any rule or regulation established by the Board of
Directors  or the  Committee  pursuant  to the  Management  Plan  will be final,
conclusive and binding on all persons interested in the Management Plan.

Shares Subject to the Plan; General Terms

         The Management  Plan  authorizes the granting of Awards the exercise of
which would allow up to an aggregate of 500,000 of the Company's Common Stock to
be acquired by the Holders of said  Awards.  In order to prevent the dilution or
enlargement  of the rights of Holders under the  Management  Plan, the number of
the  Company's  Common Stock  authorized  by the  Management  Plan is subject to
adjustment by the Board of Directors in the event of any increase or decrease in
the  number  of  shares  of  outstanding  Common  Stock  resulting  from a stock
dividend,  stock split, reverse stock split or change in the par value affecting
the Company's  Common Stock.  If any Award granted under the Management  Plan is
forfeited or terminated,  the Company's Common Stock that was available pursuant
to such Award will again be available for distribution in connection with Awards
subsequently granted under the Management Plan.

         Any equity  security  granted  pursuant to the Management  Plan must be
held for six months from the date of grant or in the case of an option, at least
six months must elapse from the date of acquisition of the option to the date of
disposition  of the option  (other  than upon  exercise  or  conversion)  or its
underlying equity security.

Eligibility

         Subject to the provisions of the Management Plan, Awards may be granted
to executive  officers  who are deemed to have  rendered or to be able to render
significant  services to the Company or its  subsidiaries and are deemed to have
contributed  or to have  the  potential  to  contribute  to the  success  of the
Company.  Incentive  Options (as  hereinafter  defined)  may be awarded  only to
persons  who, at the time of such  awards,  are  employees of the Company or its
subsidiaries.

Types of Awards

         Options

         The  Management  Plan  provides  both  for  "incentive  stock  options"
("Incentive Options") as defined in Section 422 of the Code, and for options not
qualifying as Incentive Options ("Non-qualified  Options"), both of which may be
granted with any other stock-based award under the Management Plan. The Board of
Directors or the Committee will determine the exercise price per share of Common
Stock  purchasable  under an Incentive or  Non-qualified  Option  (collectively,
"Options").  The exercise price of a Non-qualified  Option may be less than 100%
of the fair market  value on the last  trading day before the date of the grant.
The exercise price of an Incentive  Option may not be less than 100% of the fair
market value on the last trading day before the date of grant (or in the case of
an Incentive  Option  granted to a person  possessing  at the time of grant more
than 10% of the  total  combined  voting  power of all  classes  of stock of the
Company, not less than 110% of such fair market value).

         The Board of Directors or the Committee  determines when Options are to
be granted and when they may be exercised. However, an Incentive Option may only
be granted within a ten-year period  commencing on November 4, 1996 and may only
be exercised  within ten years of the date of the grant (or within five years in
the case of an  Incentive  Option  granted to a person  who,  at the time of the
grant, owns stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company or of its parent or any subsidiary). Subject
to any  limitations  or conditions of the  Management  Plan and any the Board of
Directors or the Committee may impose, Options may be exercised,  in whole or in
part,  during the term of the Option by giving written notice of exercise to the
Company  specifying  the number of the  Company's  Common Stock to be purchased.
Such notice must be accompanied by payment in full of the purchase price, either
in cash or in  securities of the Company,  or in  combination  thereof.  Options
granted under the Management Plan are exercisable  only by the Holder during his
or her  lifetime.  The  Options  granted  under the  Management  Plan may not be
transferred other than by will or by the laws of descent and distribution.

         Generally,  if the  Holder  received  an option as an  employee  of the
Company or a subsidiary,  no Option,  or any portion thereof,  granted under the
Management  Plan may be exercised by the Holder  unless he or she is employed by
the



                                       10


<PAGE>



Company or a subsidiary  of the Company at the time of the exercise and has been
so employed  continuously from the time the Option was granted.  However, in the
event the Holder's  employment with the Company is terminated due to disability,
the Option  will be fully  vested and the Holder may still  exercise  his or her
Option  for a period of one year (or such  other  lesser  period as the Board of
Directors  or the  Committee  may specify at the time of grant) from the date of
such  termination  or until the  expiration  of the stated  term of the  Option,
whichever  period  is  shorter.  Similarly,  should  a Holder  die  while in the
employment  of the Company or a  subsidiary,  the Option will be fully vested on
the date of death and his or her legal  representative  or legatee  under his or
her will may exercise the decedent Holder's Option for a period of one year from
death (or such other  greater or lesser  period as the Board of Directors or the
Committee  specifies at the time of grant) or until the expiration of the stated
term of the Option, whichever is shorter. Further, if the Holder's employment is
terminated  without cause or due to normal retirement (upon attaining the age of
65),  then  the  portion  of any  Option  that  has  vested  by the date of such
retirement or termination  may be exercised for the lesser of three months after
retirement or the balance of the Option's term.

         Stock Appreciation Rights

         The Board of Directors or the  Committee  may grant Stock  Appreciation
Rights  ("SARs"  or  singularly  "SAR") in  conjunction  with all or part of any
Option  granted under the Management  Plan or may grant SARs on a  free-standing
basis. In conjunction with Non-qualified  Options, SARs may be granted either at
or after the time of the grant of such  Non-qualified  Options.  In  conjunction
with  Incentive  Options,  SARs may be granted  only at the time of the grant of
such Incentive Options.  An SAR entitles the Holder thereof to receive an amount
(payable  in cash  and/or  the  Common  Stock,  as  determined  by the  Board of
Directors or the  Committee)  equal to the excess fair market value of one share
of Common Stock over the SAR price or the exercise price of the related  Option,
multiplied by the number of shares subject to the SAR.

         Restricted Stock Awards

         The Board of Directors or the  Committee may award shares of Restricted
Stock either alone or in addition to other Awards  granted under the  Management
Plan.  The Board of Directors or the Committee  shall  determine the  restricted
period  during which the shares of stock may be forfeited  if, for example,  the
Holder's  employment  with the  Company is  terminated.  In order to enforce the
forfeiture  provisions,   the  Management  Plan  requires  that  all  shares  of
Restricted  Stock  awarded to the Holder  remain in the physical  custody of the
Company until the restrictions on such shares have terminated.

         Deferred Stock

         The Board of  Directors or the  Committee  may award shares of Deferred
Stock either alone or in addition to other Awards  granted under the  Management
Plan.  The Board of  Directors or the  Committee  shall  determine  the deferral
period  during  which time the receipt of the stock is  deferred.  The Award may
specify, for example, that the Holder must remain employed by the Company during
the entire deferral period in order to be issued the stock.

         Stock Reload Options

         A Stock  Reload  Option  permits a Holder  who  exercises  an Option by
delivering  already owned stock (i.e.,  the  stock-for-stock  method) to receive
back from the  Company a new Option (at the current  market  price) for the same
number of shares  delivered to exercise the Option,  which new Option may not be
exercised  until  one year  after it was  granted  and  expires  on the date the
original Option would have expired (had it not been previously  exercised).  The
Board  of  Directors  or  the  Committee  may  grant  Stock  Reload  Options  in
conjunction  with any Option granted under the  Management  Plan. In conjunction
with Incentive Options,  Stock Reload Options may be granted only at the time of
the grant of such Incentive Option. In conjunction with  Non-qualified  Options,
Stock Reload  Options may be granted either at or after the time of the grant of
such Non-qualified Options.

         Other Stock-Based Awards

         The Board of Directors or the  Committee may grant  performance  shares
and shares of stock  valued with  reference to the  performance  of the Company,
either alone or in addition to or in tandem with Stock Options, Restricted



                                       11


<PAGE>



Stock or Deferred Stock.  Subject to the terms of the Management Plan, the Board
of Directors or the Committee has complete discretion to determine the terms and
conditions  applicable to any such stock-based awards. Such terms and conditions
may require,  among other things,  continued employment and/or the attainment of
specified performance objectives.

         Withholding Taxes

         Upon the exercise of any Award granted under the  Management  Plan, the
Holder may be required to remit to the Company an amount  sufficient  to satisfy
all Federal,  state and local withholding tax requirements  prior to delivery of
any  certificate  or  certificates  for the  Common  Stock.  Subject  to certain
stringent  limitations  under the  Management  Plan and at the discretion of the
Company,  the Holder may  satisfy  these  requirements  by  electing to have the
Company withhold a portion of the shares to be received upon the exercise of the
Award  having a value  equal to the  amount  of the  withholding  tax due  under
applicable federal, state and local laws.

         Agreements

         Options,   Restricted  Stock,   Deferred  Stock,  and  SARs  and  other
stock-based  awards  granted  under the  Management  Plan will be  evidenced  by
agreements  consistent  with the  Management  Plan in such  form as the Board of
Directors  or the  Committee  may  prescribe.  Neither the  Management  Plan nor
agreements thereunder confer any right to continued employment upon any Holder.

Term and Termination of the Management Plan

         The  Management  Plan was effective as of November 4, 1996  ("Effective
Date"),  subject to approval by the  stockholders of the Company within one year
after the Effective  Date. Any Awards granted under the Management Plan prior to
such approval  shall be effective when made (unless  otherwise  specified by the
Committee  at the time of grant).  If the  Management  Plan is not  approved  by
stockholders,  all Awards granted thereunder shall be deemed options not granted
under any plan.  To the extent any such options were  Incentive  Options,  these
will be treated as  Non-qualified  Options.  Unless  terminated  by the Board of
Directors,  the Management  Plan shall continue to remain  effective  until such
time as no  further  Awards  may be granted  and all  Awards  granted  under the
Management Plan are no longer outstanding. Notwithstanding the foregoing, grants
of Incentive  Options may only be made during the ten-year period  following the
Effective Date.

Amendments to the Plan

         The Board of Directors may at any time,  and from time to time,  amend,
alter,  suspend or discontinue any of the provisions of the Management Plan, but
no amendment, alteration,  suspension or discontinuance shall be made that would
impair the rights of a Holder of any Award theretofore  granted,  without his or
her consent.

Federal Income Tax Consequences

         The following  discussion  of the federal  income tax  consequences  of
participation  in the  Management  Plan is only a summary of the  general  rules
applicable  to the grant and  exercise of stock  options and does not purport to
give specific details on every variable and does not cover,  among other things,
state,  local and foreign tax treatment of participation in the Management Plan.
The  information is based on present law and  regulations,  which are subject to
being changed prospectively or retroactively.

Incentive Options

         The Holder will  recognize  no taxable  income and the Company will not
qualify for any  deduction  upon the grant or exercise of an  Incentive  Option.
Upon a disposition of the shares underlying the Incentive Option after the later
of two years from the date of grant or one year after the issuance of the shares
to the Holder,  the Holder will recognize the  difference,  if any,  between the
amount  realized and the exercise  price as long-term  capital gain or long-term
capital loss (as the case may be) if the shares are capital assets.  The excess,
if any,  of the fair  market  value of the shares on the date of  exercise of an
Incentive  Option  over  the  exercise  price  will  be  treated  as an  item of
adjustment in computing the



                                       12


<PAGE>



alternative minimum tax for a Holder's taxable year in which the exercise occurs
and may result in an  alternative  minimum tax liability for the Holder.  If the
Common Stock  acquired upon the exercise of an Incentive  Option are disposed of
before  expiration of the necessary holding period of two years from the date of
the  grant of the  Incentive  Option  and one year  after  the  exercise  of the
Incentive Option, (i) the Holder will recognize ordinary  compensation income in
the taxable year of disposition in an amount equal to the excess, if any, of the
lesser of the fair  market  value of the shares on the date of  exercise  or the
amount realized on the  disposition of the shares,  over the exercise price paid
for such shares;  and (ii) the Company will qualify for a deduction equal to any
such amount  recognized,  subject to the  limitation  that the  compensation  be
reasonable. The Holder will recognize the excess, if any, of the amount realized
over the fair market value of the shares on the date of exercise,  if the shares
are capital assets,  as short-term or long-term  capital gain,  depending on the
length of time that the Holder held the shares, and the Company will not qualify
for a deduction  with respect to such excess.  In the case of a  disposition  of
shares in the same taxable year as the exercise of the Incentive  Option,  where
the amount realized on the disposition is less than the fair market value of the
shares on the date of  exercise,  there will be no  adjustment  since the amount
treated as an item of  adjustment,  for  alternative  minimum tax  purposes,  is
limited  to the  excess of the  amount  realized  on such  disposition  over the
exercise price, which is the same amount included in regular taxable income.

Non-qualified Options

         With respect to  Non-qualified  Options (i) upon grant, the Holder will
recognize no income;  (ii) upon exercise (if the Common Stock are not subject to
a  substantial  risk  of  forfeiture),   the  Holder  will  recognize   ordinary
compensation income in an amount equal to the excess, if any, of the fair market
value of the shares on the date of exercise  over the  exercise  price,  and the
Company  will  qualify  for a  deduction  in the  same  amount,  subject  to the
requirement that the  compensation be reasonable;  and (iii) the Company will be
required to comply with applicable  Federal income tax withholding  requirements
with respect to the amount of ordinary  compensation  income  recognized  by the
Holder.  On a disposition of the shares,  the Holder will recognize gain or loss
equal to the difference  between the amount realized and the sum of the exercise
price and the ordinary compensation income recognized. Such gain or loss will be
treated  as  capital  gain or loss  if the  shares  are  capital  assets  and as
short-term or long-term capital gain or loss,  depending upon the length of time
that the Holder held the shares.

         If the shares  acquired  upon  exercise of a  Non-qualified  Option are
subject to a substantial risk of forfeiture, the Holder will recognize income at
the time when the substantial risk of forfeiture is removed and the Company will
qualify for a corresponding deduction at such time.


                             INDEPENDENT ACCOUNTANTS

         The  Company  has  selected  Deloitte & Touche  LLP as its  independent
accountants for the year ending December 31, 1997. A representative  of Deloitte
& Touche LLP is  expected to be present at the meeting  with an  opportunity  to
make a statement  if the  representative  desires to do so and is expected to be
available to respond to appropriate questions from stockholders.


                             SOLICITATION OF PROXIES

         The  solicitation  of proxies in the enclosed form is made on behalf of
the Company and the cost of this  solicitation is being paid by the Company.  In
addition to the use of the mails,  proxies  may be  solicited  personally  or by
telephone or telegraph  using the  services of  directors,  officers and regular
employees  of the  Company at nominal  cost.  Banks,  brokerage  firms and other
custodians,  nominees  and  fiduciaries  will be  reimbursed  by the Company for
expenses  incurred in sending proxy material to beneficial  owners of the Common
Stock.



                                       13


<PAGE>
                           1997 STOCKHOLDER PROPOSALS

         In order for any  Stockholder  Proposal for the 1998 Annual  Meeting of
Stockholders to be eligible for inclusion in the Company's Proxy  Statement,  it
must be received by the Company at its principal executive offices by January 7,
1998.


                                  OTHER MATTERS

         The Board of Directors  knows of no matter which will be presented  for
consideration  at the Annual Meeting other than the matters  referred to in this
Proxy  Statement.  Should  any other  matter  properly  come  before  the Annual
Meeting,  it is the intention of the persons named in the accompanying  proxy to
vote such proxy in accordance with their best judgment.

                                           By Order of the Board of Directors


                                           Scot A. Rosenblum
                                           Secretary
New York, New York
May 7, 1997



                                       14


<PAGE>



                                                                   APPENDIX A



                            CERTIFICATE OF AMENDMENT
                                       OF
                AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
                                       OF
                         INDIVIDUAL INVESTOR GROUP, INC.


     Pursuant to the General  Corporation Law of the State of Delaware  ("GCL"),
it is hereby certified that:

     1.  The  present   name  of  the   corporation   (hereinafter   called  the
"corporation")  is  Individual  Investor  Group,  Inc.  The name under which the
corporation was incorporated was Financial Data Systems, Inc. The date of filing
the original  certificate of incorporation of the corporation with the Secretary
of State of the State of Delaware was September 19, 1985.

     2. The certificate of incorporation of the corporation is hereby amended by
deleting the first paragraph of Article Fourth and in its stead substituting the
following:

                           The total  number of shares of all  classes  of stock
                  that the  Corporation  shall have authority to issue is twenty
                  million   (20,000,000)   shares,  of  which  eighteen  million
                  (18,000,000) shares will be shares of Common Stock, with a par
                  value  of  one  cent   ($.01)  per  share,   and  two  million
                  (2,000,000)  shares shall be shares of Preferred Stock, with a
                  par value of one cent ($.01) per share.

     3. Except as otherwise amended hereby, the provisions of the certificate of
incorporation of the corporation are in full force and effect.

     4. The amendment to the certificate of incorporation  has been duly adopted
in  accordance  with the  provisions of Section 242 of the GCL, by resolution of
the Board of Directors of the corporation and by affirmative vote of the holders
of a majority of the outstanding  stock entitled to vote thereon at a meeting of
stockholders.

                  IN  WITNESS   WHEREOF,   the  undersigned   have  signed  this
Certificate of Amendment on this ____ day of June 1997.




                                                    Robert Schmidt, President


ATTEST:



- ----------------------------
Scot A. Rosenblum, Secretary

                                                                                


<PAGE>


                                                                  APPENDIX B

                                Approved by Board of Directors November 4, 1996
                                     Approved by Stockholders on: _____________


                         INDIVIDUAL INVESTOR GROUP, INC.

                         1996 Management Incentive Plan


Section
    1.     Purpose; Definitions.

     1.1  Purpose.  The purpose of the  Individual  Investor  Group,  Inc.  (the
"Company") 1996 Management  Incentive Plan (the "Plan") is to enable the Company
to offer to the  executive  officers  of the  Company  and its  subsidiaries  as
determined by the Committee (as hereinafter defined) an opportunity to acquire a
proprietary  interest in the Company.  The various types of long-term  incentive
awards  which may be provided  under the Plan will enable the Company to respond
to changes in compensation  practices,  tax laws, accounting regulations and the
size and diversity of its businesses.

     1.2  Definitions.  For purposes of the Plan,  the following  terms shall be
defined as set forth below:

     (a)  "Agreement"  means the  agreement  between  the Company and the Holder
setting forth the terms and conditions of an award under the Plan.

     (b) "Board" means the Board of Directors of the Company.

     (c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto and the regulations promulgated thereunder.

     (d)  "Committee"  means any  committee  of the  Board,  which the Board may
designate to administer the Plan or any portion  thereof.  If no Committee is so
designated,  then all  references  in this Plan to  "Committee"  shall  mean the
Board.

     (e) "Common  Stock" means the Common  Stock of the Company,  par value $.01
per share.

     (f)  "Company"  means  Individual   Investor  Group,  Inc.,  a  corporation
organized under the laws of the State of Delaware.

     (g)  "Deferred  Stock"  means  Stock to be  received,  under an award  made
pursuant to Section 8, below, at the end of a specified deferral period.

     (h)   "Disability"   means   disability  as  determined   under  procedures
established by the Committee for purposes of the Plan.

     (i) "Effective Date" means the date set forth in Section 12.1, below.

     (j) "Fair  Market  Value",  unless  otherwise  required  by any  applicable
provision of the Code or any  regulations  issued  thereunder,  means, as of any
given date: (i) if the Common Stock is listed on a national  securities exchange
or quoted on the Nasdaq National Market or Nasdaq SmallCap Market, the last sale
price of the Common Stock in the principal  trading  market for the Common Stock
on the last trading day  preceding the date of grant of an award  hereunder,  as
reported by the exchange or Nasdaq, as the case may be; (ii) if the Common Stock
is not listed on a national securities exchange or quoted on the Nasdaq National
Market or Nasdaq SmallCap Market, but is traded in the over-the-counter  market,
the closing bid price for the Common Stock on the last trading day preceding the
date of grant of an award  hereunder for which such  quotations  are reported by
the OTC



<PAGE>



Bulletin  Board  or the  National  Quotation  Bureau,  Incorporated  or  similar
publisher of such  quotations;  and (iii) if the fair market value of the Common
Stock cannot be determined  pursuant to clause (i) or (ii) above,  such price as
the Committee shall determine, in good faith.

     (k) "Holder" means a person who has received an award under the Plan.

     (l)  "Incentive  Stock  Option"  means any Stock Option  intended to be and
designated as an "incentive  stock option"  within the meaning of Section 422 of
the Code.

     (m)  "Nonqualified  Stock  Option"  means any Stock  Option  that is not an
Incentive Stock Option.

     (n) "Normal  Retirement"  means retirement from active  employment with the
Company or any Subsidiary on or after age 65.

     (o) "Other  Stock-Based  Award" means an award under Section 9, below, that
is  valued in whole or in part by  reference  to, or is  otherwise  based  upon,
Stock.

     (p) "Parent" means any present or future parent corporation of the Company,
as such term is defined in Section 424(e) of the Code.

     (q) "Plan"  means the  Individual  Investor  Group,  Inc.  1996  Management
Incentive Plan, as hereinafter amended from time to time.

     (r) "Restricted  Stock" means Stock,  received under an award made pursuant
to Section 7, below, that is subject to restrictions under said Section 7.

     (s) "SAR Value"  means the excess of the Fair Market Value (on the exercise
date) of the  number  of  shares  for  which  the  Stock  Appreciation  Right is
exercised over the exercise price that the participant  would have otherwise had
to pay to exercise the related Stock Option and purchase the relevant shares.

     (t)  "Stock"  means the  Common  Stock of the  Company,  par value $.01 per
share.

     (u) "Stock Appreciation Right" means the right to receive from the Company,
on surrender of all or part of the related Stock Option,  without a cash payment
to the  Company,  a number  of shares  of  Common  Stock  equal to the SAR Value
divided by the exercise price of the Stock Option.

     (v) "Stock Option" or "Option" means any option to purchase shares of Stock
which is granted pursuant to the Plan.

     (w) "Stock  Reload  Option"  means any option  granted  under  Section 5.3,
below, as a result of the payment of the exercise price of a Stock Option and/or
the  withholding tax related thereto in the form of Stock owned by the Holder or
the withholding of Stock by the Company.

     (x) "Subsidiary" means any present or future subsidiary  corporation of the
Company, as such term is defined in Section 424(f) of the Code.

Section 2.   Administration.

            2.1   Committee  Membership.  The Plan shall be  administered by the
Board or a Committee.  Committee  members shall serve for such term as the Board
may in each case  determine,  and shall be subject to removal at any time by the
Board.


                                        2


<PAGE>



             2.2  Powers of Committee.  The Committee  shall have full authority
to award,  pursuant  to the terms of the Plan:  (i) Stock  Options,  (ii)  Stock
Appreciation  Rights,  (iii)  Restricted  Stock,  (iv) Deferred Stock, (v) Stock
Reload  Options  and/or  (vi)  Other   Stock-Based   Awards.   For  purposes  of
illustration  and not of  limitation,  the  Committee  shall have the  authority
(subject to the express provisions of this Plan):

     (a) to select the  executive  officers of the Company or any  Subsidiary to
whom Stock Options, Stock Appreciation Rights, Restricted Stock, Deferred Stock,
Reload Stock Options  and/or Other  Stock-Based  Awards may from time to time be
awarded hereunder.

     (b) to determine the terms and conditions,  not inconsistent with the terms
of the Plan,  of any award  granted  hereunder  (including,  but not limited to,
number of shares, share price, any restrictions or limitations, and any vesting,
exchange,  surrender,  cancellation,   acceleration,  termination,  exercise  or
forfeiture provisions, as the Committee shall determine);

     (c) to determine any specified  performance  goals or such other factors or
criteria  which  need  to be  attained  for  the  vesting  of an  award  granted
hereunder;

     (d) to  determine  the terms and  conditions  under  which  awards  granted
hereunder are to operate on a tandem basis and/or in  conjunction  with or apart
from other equity awarded under this Plan and cash awards made by the Company or
any Subsidiary outside of this Plan;

     (e) to  permit a Holder to elect to defer a  payment  under the Plan  under
such  rules  and  procedures  as the  Committee  may  establish,  including  the
crediting of interest on deferred  amounts  denominated  in cash and of dividend
equivalents on deferred amounts denominated in Stock;

     (f) to determine the extent and  circumstances  under which Stock and other
amounts  payable with respect to an award  hereunder shall be deferred which may
be either automatic or at the election of the Holder; and

     (g) to  substitute  (i) new Stock  Options  for  previously  granted  Stock
Options,  which  previously  granted Stock  Options have higher option  exercise
prices and/or  contain other less  favorable  terms,  and (ii) new awards of any
other type for  previously  granted  awards of the same type,  which  previously
granted awards are upon less favorable terms.

        2.3          Interpretation of Plan.

     (a) Committee Authority.  Subject to Section 11, below, the Committee shall
have the  authority  to  adopt,  alter and  repeal  such  administrative  rules,
guidelines and practices governing the Plan as it shall, from time to time, deem
advisable,  to  interpret  the  terms and  provisions  of the Plan and any award
issued under the Plan (and to determine the form and substance of all Agreements
relating  thereto),  and to otherwise  supervise the administration of the Plan.
Subject to Section 11, below,  all decisions  made by the Committee  pursuant to
the provisions of the Plan shall be made in the Committee's  sole discretion and
shall be final  and  binding  upon  all  persons,  including  the  Company,  its
Subsidiaries and Holders.

     (b)  Incentive  Stock  Options.  Anything  in  the  Plan  to  the  contrary
notwithstanding,  no term or provision of the Plan  relating to Incentive  Stock
Options  (including  but limited to Stock Reload  Options or Stock  Appreciation
rights granted in conjunction  with an Incentive  Stock Option) or any Agreement
providing for Incentive Stock Options shall be interpreted,  amended or altered,
nor shall any discretion or authority granted under the Plan be so exercised, so
as to disqualify the Plan under Section 422 of the Code, or, without the consent
of the Holder(s)  affected,  to disqualify any Incentive Stock Option under such
Section 422.


                                        3


<PAGE>



Section  3.     Stock Subject to Plan.

           3.1    Number of Shares.  The total  number of shares of Common Stock
reserved and available for distribution  under the Plan shall be 500,000 shares.
Shares of Stock under the Plan may consist,  in whole or in part,  of authorized
and unissued  shares or treasury  shares.  If any shares of Stock that have been
granted pursuant to a Stock Option cease to be subject to a Stock Option,  or if
any shares of Stock that are subject to any Stock Appreciation Right, Restricted
Stock,  Deferred  Stock award,  Reload Stock Option or Other  Stock-Based  Award
granted hereunder are forfeited,  or any such award otherwise terminates without
a payment being made to the Holder in the form of Stock, such shares shall again
be available for  distribution in connection with future grants and awards under
the Plan.  Only net shares  issued upon a  stock-for-stock  exercise  (including
stock used for withholding  taxes) shall be counted against the number of shares
available under the Plan.

            3.2   Adjustment Upon Changes in  Capitalization,  Etc. In the event
of any change in the number of outstanding shares of Common Stock of the Company
occurring as the result of a stock split,  reverse stock split or stock dividend
on  the  Common  Stock,   after  the  grant  of  an  Award,  the  Company  shall
proportionately  adjust the  number of shares of Stock  subject to the Award and
the price to be paid on exercise of an Award as well as the aggregate  number of
shares  reserved for issuance  under the Plan. Any right to acquire a fractional
share of Stock  resulting  from any  adjustments  will be rounded to the nearest
whole share of Stock.  If the Company shall be the surviving  corporation in any
merger,  combination or  consolidation,  any outstanding Award shall pertain and
apply to the shares of Stock to which the Holder is entitled, without adjustment
for  issuance by the Company of any  securities  in the merger,  combination  or
consolidation.  In the event of a change in the par value of the Common Stock of
the Company which is subject to any outstanding Award, such Award will be deemed
to pertain to the shares of Stock resulting from any such change.  To the extent
that the foregoing  adjustments  relate to the Common Stock of the Company,  the
adjustments  will be made by the Committee  whose  determination  will be final,
binding and conclusive.

Section  4.     Eligibility.

           4.1    General.  Awards may be made or granted to executive  officers
of the Company and its  subsidiaries as selected by the Committee who are deemed
to have rendered or to be able to render significant  services to the Company or
its Subsidiaries and who are deemed to have contributed or to have the potential
to contribute to the success of the Company.  No Incentive Stock Option shall be
granted to any person who is not an employee of the Company or a  Subsidiary  at
the time of grant.

Section  5.      Required Six Month Holding Period.

         A period of not less than six months must elapse from the date of grant
 of an award under the Plan,  before any disposition by a Holder of a derivative
 security (as defined in Rule 16a-1 promulgated under the
Securities  Exchange Act of 1934,  as amended)  issued under this Plan or before
any  disposition  by a Holder of any Stock  purchased or granted  pursuant to an
award under this Plan.

Section  6.      Stock Options.

        6.1       Grant and Exercise.  Stock Options  granted under the Plan may
be of two  types:  (i)  Incentive  Stock  Options  and (ii)  Nonqualified  Stock
Options.  Any Stock Option granted under the Plan shall contain such terms,  not
inconsistent  with this Plan, or with respect to Incentive  Stock  Options,  not
inconsistent with the Code, as the Committee may from time to time approve.  The
Committee   shall  have  the  authority  to  grant   Incentive   Stock  Options,
Non-Qualified  Stock  Options,  or both types of Stock  Options and which may be
granted  alone or in addition to other  awards  granted  under the Plan.  To the
extent that any Stock Option  intended to qualify as an  Incentive  Stock Option
does not so qualify,  it shall constitute a separate  Nonqualified Stock Option.
An  Incentive  Stock  Option may be granted  only  within  the  ten-year  period
commencing from the Effective Date and may only be exercised within ten years of
the date of grant  (or five  years  in the  case of an  Incentive  Stock  Option
granted to an optionee ("10% Stockholder") who, at the time of grant, owns Stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company.

                                        4


<PAGE>




     6.2 Terms and  Conditions.  Stock  Options  granted under the Plan shall be
subject to the following terms and conditions:

     (a) Exercise Price. The exercise price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant and may
be less  than  100% of the Fair  Market  Value of the  Stock as  defined  above;
provided,  however,  that the exercise price of an Incentive  Stock Option shall
not be less than 100% of the Fair  Market  Value of the  Stock if  granted  to a
person other than a 10% Stockholder  and, if granted to a 10%  Stockholder,  the
exercise  price  shall  not be less than  110% of the Fair  Market  Value of the
Stock.

     (b) Option Term. Subject to the limitations in Section 6.1, above, the term
of each Stock Option shall be fixed by the Committee.

     (c)  Exercisability.  Stock  Options shall be  exercisable  at such time or
times,  and subject to such terms and  conditions  as shall be determined by the
Committee.  If the Committee provides, in its discretion,  that any Stock Option
is  exercisable  only in  installments,  i.e.,  that it  vests  over  time,  the
Committee may waive such installment exercise provisions at any time at or after
the time of grant in whole or in part,  based upon such factors as the Committee
shall determine.

     (d) Method of  Exercise.  Subject to  whatever  installment,  exercise  and
waiting period provisions are applicable in a particular case, Stock Options may
be exercised  in whole or in part at any time during the term of the Option,  by
giving written notice of exercise to the Company specifying the number of shares
of Stock to be purchased. Such notice shall be accompanied by payment in full of
the purchase price,  which shall be in cash or, unless otherwise provided in the
Agreement,  in shares of Stock (including  Restricted Stock and other contingent
awards  under this Plan) or,  partly in cash and partly in such  Stock,  or such
other  means  which the  Committee  determines  are  consistent  with the Plan's
purpose  and  applicable  law.  Cash  payments  shall be made by wire  transfer,
certified or bank check or personal  check, in each case payable to the order of
the  Company;  provided,  however,  that the  Company  shall not be  required to
deliver  certificates  for  shares of Stock  with  respect to which an Option is
exercised  until the Company  has  confirmed  the receipt of good and  available
funds in payment of the purchase  price  thereof.  Payments in the form of Stock
shall be valued at the Fair  Market  Value of a share of Stock on the date prior
to the  date of  exercise.  Such  payments  shall be made by  delivery  of stock
certificates  in negotiable  form which are effective to transfer good and valid
title thereto to the Company, free of any liens or encumbrances.  Subject to the
terms of the  Agreement,  the  Committee  may,  in its sole  discretion,  at the
request of the Holder,  deliver upon the exercise of a Nonqualified Stock Option
a  combination  of shares of Deferred  Stock and Common  Stock;  provided  that,
notwithstanding  the  provisions of Section 9 of the Plan,  such Deferred  Stock
shall be fully vested and not subject to forfeiture. A Holder shall have none of
the rights of a  stockholder  with  respect to the shares  subject to the Option
until such shares  shall be  transferred  to the Holder upon the exercise of the
Option.

     (e) Transferability.  Except as may be set forth in the Agreement, no Stock
Option shall be  transferable by the Holder other than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during the
Holder's lifetime, only by the Holder.

     (f) Termination by Reason of Death. If a Holder's employment by the Company
or a  Subsidiary  terminates  by reason of death,  any Stock Option held by such
Holder,  unless  otherwise  determined by the Committee at the time of grant and
set  forth in the  Agreement,  shall  be  fully  vested  and may  thereafter  be
exercised  by the legal  representative  of the estate or by the  legatee of the
Holder  under the will of the  Holder,  for a period of one year (or such  other
greater or lesser period as the Committee may specify at grant) from the date of
such  death or until the  expiration  of the stated  term of such Stock  Option,
whichever period is the shorter.

     (g)  Termination by Reason of Disability.  If a Holder's  employment by the
Company or any Subsidiary  terminates by reason of Disability,  any Stock Option
held by such Holder, unless otherwise determined by the Committee at the time of
grant and set forth in the  Agreement,  shall be fully vested and may thereafter
be  exercised  by the Holder for a period of one year (or such other  greater or
lesser period as the Committee may

                                        5


<PAGE>



specify at the time of grant) from the date of such termination of employment or
until the expiration of the stated term of such Stock Option,  whichever  period
is the shorter.

     (h) Other  Termination.  Subject to the provisions of Section 13.3,  below,
and unless  otherwise  determined  by the Committee at the time of grant and set
forth  in  the  Agreement,  if a  Holder  is an  employee  of the  Company  or a
Subsidiary at the time of grant and if such  Holder's  employment by the Company
or any Subsidiary terminates for any reason other than death or Disability,  the
Stock  Option  shall  thereupon  automatically  terminate,  except  that  if the
Holder's  employment is terminated by the Company or a Subsidiary  without cause
or due to Normal  Retirement,  then the portion of such Stock  Option  which has
vested on the date of  termination of employment may be exercised for the lesser
of three months after  termination  of  employment  or the balance of such Stock
Option's term.

     (i)  Additional  Incentive  Stock  Option  Limitation.  In the  case  of an
Incentive Stock Option,  the aggregate Fair Market Value of Stock (determined at
the time of grant of the Option) with respect to which  Incentive  Stock Options
become exercisable by a Holder during any calendar year (under all such plans of
the Company and its Parent and Subsidiary) shall not exceed $100,000.

     (j) Buyout and Settlement Provisions. The Committee may at any time, in its
sole discretion,  offer to buy out a Stock Option previously granted, based upon
such terms and conditions as the Committee  shall  establish and  communicate to
the Holder at the time that such offer is made.

     (k) Stock Option Agreement. Each grant of a Stock Option shall be confirmed
by, and shall be subject to the terms of, the Agreement  executed by the Company
and the Holder.

       6.3        Stock  Reload  Option.  The  Committee  may also  grant to the
Holder (concurrently with the grant of an Incentive Stock Option and at or after
the time of grant in the case of a  Nonqualified  Stock  Option) a Stock  Reload
Option up to the  amount of shares of Stock  held by the Holder for at least six
months and used to pay all or part of the  exercise  price of an Option  and, if
any, withheld by the Company as payment for withholding taxes. Such Stock Reload
Option  shall have an exercise  price  equal to the Fair Market  Value as of the
date  of  the  Stock  Reload  Option  grant.  Unless  the  Committee  determines
otherwise,  a Stock Reload Option may be exercised  commencing one year after it
is granted and shall expire on the date of expiration of the Option to which the
Reload Option is related.

Section  7.         Stock Appreciation Rights.

        7.1       Grant and Exercise. The Committee may grant Stock Appreciation
Rights to  participants  who have been, or are being granted,  Options under the
Plan as a means of allowing such  participants to exercise their Options without
the need to pay the exercise price in cash. In the case of a Nonqualified  Stock
Option, a Stock Appreciation Right may be granted either at or after the time of
the grant of such  Nonqualified  Stock Option. In the case of an Incentive Stock
Option, a Stock  Appreciation Right may be granted only at the time of the grant
of such Incentive Stock Option.

     7.2 Terms and Conditions. Stock Appreciation Rights shall be subject to the
following terms and conditions:

     (a) Exercisability. Stock Appreciation Rights shall be exercisable as shall
be determined by the  Committee and set forth in the  Agreement,  subject to the
limitations,  if any,  imposed by the Code,  with  respect to related  Incentive
Stock Options.

     (b) Termination.  A Stock  Appreciation  Right shall terminate and shall no
longer be  exercisable  upon the  termination  or exercise of the related  Stock
Option.

     (c) Method of Exercise. Stock Appreciation Rights shall be exercisable upon
such terms and  conditions as shall be determined by the Committee and set forth
in the Agreement and by surrendering the

                                        6


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applicable  portion  of  the  related  Stock  Option.  Upon  such  exercise  and
surrender,  the Holder  shall be entitled  to receive a number of Option  Shares
equal to the SAR Value divided by the Fair Market Value (on the exercise date).

     (d) Shares Affected Upon Plan. The granting of a Stock  Appreciation  Right
shall not affect the number of shares of Stock  available  for awards  under the
Plan. The number of shares available for awards under the Plan will, however, be
reduced by the number of shares of Stock  acquirable  upon exercise of the Stock
Option to which such Stock Appreciation Right relates.

Section  8.       Restricted Stock.

       8.1        Grant.  Shares of Restricted Stock may be awarded either alone
or in addition to other  awards  granted  under the Plan.  The  Committee  shall
determine the eligible  persons to whom, and the time or times at which,  grants
of  Restricted  Stock will be awarded,  the number of shares to be awarded,  the
price (if any) to be paid by the  Holder,  the time or times  within  which such
awards may be subject to  forfeiture  (the  "Restriction  Period"),  the vesting
schedule and rights to acceleration  thereof, and all other terms and conditions
of the awards.

  8.2    Terms and Conditions.  Each Restricted  Stock award shall be subject to
the following terms and conditions:

     (a) Certificates.  Restricted Stock, when issued,  will be represented by a
stock  certificate or certificates  registered in the name of the Holder to whom
such Restricted  Stock shall have been awarded.  During the Restriction  Period,
certificates  representing the Restricted Stock and any securities  constituting
Retained Distributions (as defined below) shall bear a legend to the effect that
ownership of the  Restricted  Stock (and such Retained  Distributions),  and the
enjoyment of all rights  appurtenant  thereto,  are subject to the restrictions,
terms and conditions  provided in the Plan and the Agreement.  Such certificates
shall be deposited by the Holder with the Company, together with stock powers or
other  instruments  of  assignment,  each  endorsed in blank,  which will permit
transfer to the Company of all or any  portion of the  Restricted  Stock and any
securities  constituting Retained  Distributions that shall be forfeited or that
shall not become vested in accordance with the Plan and the Agreement.

     (b)  Rights  of  Holder.  Restricted  Stock  shall  constitute  issued  and
outstanding shares of Common Stock for all corporate  purposes.  The Holder will
have the right to vote such Restricted  Stock, to receive and retain all regular
cash dividends and other cash equivalent  distributions  as the Board may in its
sole discretion  designate,  pay or distribute on such  Restricted  Stock and to
exercise all other  rights,  powers and  privileges  of a holder of Common Stock
with respect to such Restricted  Stock,  with the exceptions that (i) the Holder
will not be  entitled  to  delivery  of the stock  certificate  or  certificates
representing  such  Restricted  Stock until the  Restriction  Period  shall have
expired and unless all other  vesting  requirements  with respect  thereto shall
have  been  fulfilled;  (ii)  the  Company  will  retain  custody  of the  stock
certificate  or  certificates  representing  the  Restricted  Stock  during  the
Restriction  Period;  (iii) other than  regular  cash  dividends  and other cash
equivalent  distributions as the Board may in its sole discretion designate, pay
or distribute,  the Company will retain custody of all distributions  ("Retained
Distributions")  made or declared with respect to the Restricted Stock (and such
Retained  Distributions  will be  subject  to the same  restrictions,  terms and
conditions as are applicable to the Restricted  Stock) until such time, if ever,
as the Restricted Stock with respect to which such Retained  Distributions shall
have been made,  paid or declared  shall have become  vested and with respect to
which the  Restriction  Period shall have  expired;  (iv) a breach of any of the
restrictions,  terms or  conditions  contained in this Plan or the  Agreement or
otherwise  established by the Committee with respect to any Restricted  Stock or
Retained  Distributions will cause a forfeiture of such Restricted Stock and any
Retained Distributions with respect thereto.

     (c) Vesting; Forfeiture. Upon the expiration of the Restriction Period with
respect  to each award of  Restricted  Stock and the  satisfaction  of any other
applicable restrictions, terms and conditions (i) all or part of such Restricted
Stock shall become vested in  accordance  with the terms of the  Agreement,  and
(ii) any  Retained  Distributions  with respect to such  Restricted  Stock shall
become vested to the extent that the Restricted Stock related thereto shall have
become vested. Any such Restricted Stock and Retained Distributions that do not

                                        7


<PAGE>



vest shall be forfeited to the Company and the Holder shall not thereafter  have
any rights with respect to such Restricted Stock and Retained Distributions that
shall have been so forfeited.

Section  9.      Deferred Stock.

         9.1      Grant. Shares of Deferred Stock may be awarded either alone or
in  addition  to other  awards  granted  under the  Plan.  The  Committee  shall
determine the eligible  persons to whom, and the time or times at which,  grants
of Deferred Stock will be awarded,  the number of shares of Deferred Stock to be
awarded to any person, the duration of the period (the "Deferral Period") during
which, and the conditions  under which,  receipt of the shares will be deferred,
and all the other terms and conditions of the awards.

  9.2    Terms and Conditions. Each Deferred Stock award shall be subject to the
following terms and conditions:

     (a)  Certificates.  At  the  expiration  of the  Deferral  Period  (or  the
Additional  Deferral  Period  referred  to  in  Section  9.2  (d)  below,  where
applicable),  share certificates shall be issued and delivered to the Holder, or
his legal representative, representing the number equal to the shares covered by
the Deferred Stock award.

     (b) Rights of Holder. A person entitled to receive Deferred Stock shall not
have any rights of a stockholder by virtue of such award until the expiration of
the applicable Deferral Period and the issuance and delivery of the certificates
representing  such Stock.  The shares of Stock  issuable upon  expiration of the
Deferral  Period  shall  not be  deemed  outstanding  by the  Company  until the
expiration of such  Deferral  Period and the issuance and delivery of such Stock
to the Holder.

     (c) Vesting;  Forfeiture.  Upon the expiration of the Deferral  Period with
respect  to each  award of  Deferred  Stock  and the  satisfaction  of any other
applicable restrictions, terms and conditions all or part of such Deferred Stock
shall become  vested in  accordance  with the terms of the  Agreement.  Any such
Deferred  Stock that does not vest shall be  forfeited  to the  Company  and the
Holder shall not thereafter have any rights with respect to such Deferred Stock.

     (d) Additional  Deferral Period. A Holder may request to, and the Committee
may at any time,  defer the receipt of an award (or an  installment of an award)
for an additional  specified  period or until a specified event (the "Additional
Deferral  Period").  Subject to any exceptions  adopted by the  Committee,  such
request  must  generally  be made at least one year prior to  expiration  of the
Deferral Period for such Deferred Stock award (or such installment).

Section  10.       Other Stock-Based Awards.

       10.1       Grant and Exercise.  Other Stock-Based  Awards may be awarded,
subject to limitations under applicable law, that are denominated or payable in,
valued in whole or in part by reference  to, or  otherwise  based on, or related
to, shares of Common Stock, as deemed by the Committee to be consistent with the
purposes of the Plan, including, without limitation,  purchase rights, shares of
Common Stock awarded which are not subject to any  restrictions  or  conditions,
convertible or exchangeable debentures,  or other rights convertible into shares
of Common Stock and awards  valued by reference to the value of securities of or
the  performance  of specified  Subsidiaries.  Other  Stock-Based  Awards may be
awarded  either alone or in addition to or in tandem with any other awards under
this Plan or any other plan of the Company.

       10.2       Eligibility for Other Stock-Based  Awards. The Committee shall
determine the eligible  persons to whom and the time or times at which grants of
such  other  stock-based  awards  shall be made,  the number of shares of Common
Stock to be awarded pursuant to such awards,  and all other terms and conditions
of the awards.

       10.3       Terms and Conditions.  Each Other Stock-Based Award shall be
subject to such terms and conditions as may be determined by the Committee.

                                        8


<PAGE>




Section  11.        Amendment and Termination.

         The Board may at any time, and from time to time, amend alter,  suspend
or discontinue any of the provisions of the Plan, but no amendment,  alteration,
suspension  or  discontinuance  shall be made which would impair the rights of a
Holder  under any  Agreement  theretofore  entered into  hereunder,  without the
Holder's consent.

Section  12.        Term of Plan.

           12.1   Effective  Date. The Plan shall be effective as of November 4,
1996  ("Effective  Date"),  subject to the approval of the Plan by the Company's
stockholders  within one year after the Effective Date. Any awards granted under
the Plan prior to such approval shall be effective  when made (unless  otherwise
specified by the Committee at the time of grant), but shall be conditioned upon,
and subject to, such approval of the Plan by the Company's  stockholders  and no
awards  shall  vest or  otherwise  become  free of  restrictions  prior  to such
approval.

           12.2   Termination  Date.  Unless  terminated by the Board, this Plan
shall  continue  to remain  effective  until such time no further  awards may be
granted  and all  awards  granted  under  the  Plan are no  longer  outstanding.
Notwithstanding  the  foregoing,  grants of Incentive  Stock Options may only be
made during the ten year period following the Effective Date.

Section  13.          General Provisions.

           13.1   Written Agreements. Each award granted under the Plan shall be
confirmed by, and shall be subject to the terms of the Agreement executed by the
Company and the Holder.  The  Committee  may  terminate any award made under the
Plan if the  Agreement  relating  thereto is not  executed  and  returned to the
Company within ten days after the Agreement has been delivered to the Holder for
his or her execution.

           13.2   Unfunded Status of Plan. The Plan is intended to constitute an
"unfunded"  plan for  incentive and deferred  compensation.  With respect to any
payments not yet made to a Holder by the Company, nothing contained herein shall
give any such  Holder  any  rights  that are  greater  than  those of a  general
creditor of the Company.

           13.3   Employees.

     (a)  Engaging  in  Competition  With the  Company.  In the event a Holder's
employment  with the  Company  or a  Subsidiary  is  terminated  for any  reason
whatsoever,  and within  eighteen  months  after the date  thereof  such  Holder
accepts  employment with any competitor of, or otherwise  engages in competition
with,  the Company,  the  Committee,  in its sole  discretion,  may require such
Holder  to return  to the  Company  the  economic  value of any award  which was
realized or obtained by such Holder at any time during the period  beginning  on
that date which is six months prior to the date of such Holder's  termination of
employment with the Company.

     (b)  Termination  for Cause.  The  Committee  may,  in the event a Holder's
employment  with the Company or a Subsidiary is terminated for cause,  annul any
award  granted  under  this  Plan to such  employee  and,  in  such  event,  the
Committee,  in its sole  discretion,  may  require  such Holder to return to the
Company the  economic  value of any award which was realized or obtained by such
Holder at any time during the period  beginning on that date which is six months
prior to the date of such Holder's termination of employment with the Company.

     (c) No Right of Employment.  Nothing  contained in the Plan or in any award
hereunder  shall be deemed to confer  upon any Holder who is an  employee of the
Company or any Subsidiary any right to continued  employment with the Company or
any Subsidiary,  nor shall it interfere in any way with the right of the Company
or any  Subsidiary to terminate the  employment of any Holder who is an employee
at any time.


                                        9


<PAGE>



        13.4      Investment  Representations.  The  Committee  may require each
person acquiring shares of Stock pursuant to a Stock Option or other award under
the Plan to  represent  to and agree with the Company in writing that the Holder
is acquiring the shares for investment without a view to distribution thereof.

        13.5      Additional  Incentive  Arrangements.  Nothing contained in the
Plan shall prevent the Board from  adopting  such other or additional  incentive
arrangements  as it may deem  desirable,  including,  but not  limited  to,  the
granting of Stock  Options and the  awarding  of stock and cash  otherwise  than
under the Plan;  and such  arrangements  may be either  generally  applicable or
applicable only in specific cases.

        13.6      Withholding  Taxes.  Not  later  than  the date as of which an
amount  must first be  included  in the gross  income of the Holder for  Federal
income tax  purposes  with  respect to any option or other award under the Plan,
the Holder shall pay to the Company,  or make  arrangements  satisfactory to the
Committee  regarding  the payment of, any Federal,  state and local taxes of any
kind  required  by law to be withheld or paid with  respect to such  amount.  If
permitted  by the  Committee,  tax  withholding  or payment  obligations  may be
settled with Common Stock, including Common Stock that is part of the award that
gives rise to the withholding requirement.  The obligations of the Company under
the Plan shall be conditioned  upon such payment or arrangements and the Company
or the Holder's  employer (if not the Company) shall, to the extent permitted by
law,  have the right to  deduct  any such  taxes  from any  payment  of any kind
otherwise due to the Holder from the Company or any Subsidiary.

         13.7     Governing  Law. The Plan and all awards made and actions taken
thereunder shall be governed by and construed in accordance with the laws of the
State of New York (without regard to choice of law provisions).

         13.8     Other  Benefit  Plans.  Any award granted under the Plan shall
not be  deemed  compensation  for  purposes  of  computing  benefits  under  any
retirement  plan of the  Company  or any  Subsidiary  and shall not  affect  any
benefits under any other benefit plan now or  subsequently in effect under which
the  availability  or amount of benefits is related to the level of compensation
(unless  required by specific  reference  in any such other plan to awards under
this Plan).

         13.9     Non-Transferability. Except as otherwise expressly provided in
the Plan or the Agreement,  no right or benefit under the Plan may be alienated,
sold, assigned, hypothecated,  pledged, exchanged, transferred,  encumbranced or
charged,  and any  attempt  to  alienate,  sell,  assign,  hypothecate,  pledge,
exchange, transfer, encumber or charge the same shall be void.

         13.10    Applicable  Laws. The  obligations of the Company with respect
to all Stock  Options  and  awards  under the Plan  shall be  subject to (i) all
applicable  laws,  rules and regulations and such approvals by any  governmental
agencies as may be required,  including,  without limitation, the Securities Act
of 1933,  as  amended,  and (ii) the rules  and  regulations  of any  securities
exchange on which the Stock may be listed.

         13.11    Conflicts. If any of the terms or provisions of the Plan or an
Agreement  (with  respect  to  Incentive   Stock  Options)   conflict  with  the
requirements of Section 422 of the Code, then such terms or provisions  shall be
deemed  inoperative to the extent they so conflict with the requirements of said
Section 422 of the Code.  Additionally,  if this Plan or any Agreement  does not
contain any  provision  required to be included  herein under Section 422 of the
Code, such provision shall be deemed to be incorporated  herein and therein with
the same force and effect as if such provision had been set out at length herein
and therein.  If any of the terms or provisions  of any Agreement  conflict with
any terms or  provision  of the Plan,  then such  terms or  provisions  shall be
deemed  inoperative to the extent they so conflict with the  requirements of the
Plan. Additionally,  if any Agreement does not contain any provision required to
be  included  therein  under  the  Plan,  such  provision  shall be deemed to be
incorporated  therein  with the same force and effect as if such  provision  had
been set out at length therein.

         13.12    Non-Registered  Stock.  The shares of Stock to be  distributed
under this Plan have not been, as of the Effective  Date,  registered  under the
Securities  Act  of  1933,  as  amended,  or any  applicable  state  or  foreign
securities  laws and the Company has no obligation to any Holder to register the
Stock or to assist the Holder in obtaining an exemption from the various
registration  requirements,  or to list the Stock on a national securities
exchange.

                                       10


<PAGE>


                     INDIVIDUAL INVESTOR GROUP, INC. - PROXY
                       Solicited by the Board of Directors
                 for Annual Meeting to be held on June 18, 1997


        The  undersigned  Stockholder(s)  of INDIVIDUAL  INVESTOR  GROUP, INC.,
P     a Delaware corporation ("Company"), hereby appoints Robert H. Schmidt and
      Peter M. Ziemba,  or either of them, with full power of  substitution  and
R     to act without the other, as the agents, attorneys and proxies of the
      undersigned,  to vote the shares  standing  in the  name  of the 
O     undersigned  at the  Annual  Meeting  of Stockholders of the Company to be
      held on June 18, 1997 and at all  adjournments thereof.  This proxy will
X     be voted in  accordance  with the  instructions  given below.  If no 
      instructions  are given,  this proxy will be voted FOR all of the
Y     following proposals.

   1.             Election of the following Directors:

FOR all nominees listed below, except       WITHHOLD AUTHORITY to vote
as marked to the contrary below   |_|       for all nominees listed below|_|

                   Jonathan L. Steinberg and Scot A. Rosenblum
  
      INSTRUCTIONS:   To withhold authority to vote for any individual nominee,
         write that nominee's name in the space below.

                      -------------------------------------

   2.             To amend the  Certificate of  Incorporation  of the Company to
                  increase  the number of  authorized  shares of Common Stock to
                  18,000,000  and the number of  authorized  shares of Preferred
                  Stock to 2,000,000.

           FOR  |_|                  AGAINST  |_|                ABSTAIN  |_|

   3.             To approve and adopt the 1996 Management Incentive Plan.

           FOR  |_|                  AGAINST  |_|                ABSTAIN  |_|

   4.             In their discretion, the proxies are authorized to vote upon 
                  such other business as may come before the meeting or any 
                  adjournment thereof.

  |_|             I plan to attend the Annual Meeting.


                                                      Date ____________  , 1997



                                                     --------------------------
                                                      Signature


                                                     --------------------------
                                                      Signature if held jointly


     Please sign  exactly as name appears  above.  When shares are held by joint
tenants,  both should sign. When signing as attorney,  executor,  administrator,
trustee or guardian,  please give full title as such. If a  corporation,  please
sign in full  corporate  name by President  or other  authorized  officer.  If a
partnership, please sign in partnership name by authorized person.





                                                      

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